TaxTMI 
TaxTMI 
TaxTMI 
2023 (7) TMI 191
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.... appellant, registered under the Tamil Nadu General Sales Tax Act, 1959 ("the Act", hereafter), deals in maize starch since 1975. The classification of maize starch under the Act is the subject of dispute in the first of the two appeals. b) The Government of Tamil Nadu, vide a Notification No. 89 of 1970 dated 14th March, 1970 ("Exemption Notification", hereafter) exempted the products of millets including maize from tax payable under the Act. The relevant extract of the Exemption Notification reads as under: "[...] the Governor of Tamil Nadu hereby exempts, with effect on and from the 1st April 1970, all sales of products of millets (like rice, flour, brokens and bran of cholam, cumbu, ragi, thinai, varagu, samai, kudiraivali, milo and maize) from the tax payable under the said Act." c) The Legislative Assembly of Tamil Nadu ("Legislature", hereafter) amended The TNGST (Amendment) Act, 1993 (Act No. 24 of 1993) Schedule I to the Act, adding Part C and including Entry No. 53 therein, which imposed a 5% tax on 'sago and starch of any kind' w.e.f. 12th March, 1993. Later, through another amendment The TNGST (Second Amendment) Act, 1996 (Act No. 37 of 1996), 'sago and starch of....
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....xed at 11%. However, a request having been received from the appellant for withdrawal of the Circular dated 23rd June, 1998, the Commissioner vide a subsequent Circular dated 8th October, 1998 cancelled the earlier Circular dated 23rd June, 1998 and clarified that maize starch is taxable from 1st April, 1994, since Item 8 of Part B of Schedule III does not include maize starch. In view of specific Entry No. 61 of Part D of Schedule I, i.e., "sago and starch of any kind", it covers maize starch also, subject to a 4% tax to be levied w.e.f. 17th July, 1996 and not tax at 11%. g) Questioning the aforesaid clarification, the appellant made a representation before the Commissioner which came to be rejected on 28th June, 1999. The appellant was served with notices Dated 25th June, 1999 and 6th July, 1999 for recovery of general sales tax to the tune of Rs 7,69,729/- for FY 1998-1999, followed by a provisional assessment notice Dated 27th July, 1999 issued by the Commissioner. This triggered litigation between the parties. THE HISTORY OF LITIGATION 3. The judicial trajectory of the case leading to the present stage is set out hereunder: a) Assessment proceedings having been initiat....
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....998 carries legal validity as it was issued subsequent to the insertion of Section 28-A. Having concluded that maize starch will not be entitled to the benefit of exemption, the High Court upheld the validity of the Circular dated 8th October, 1998 which classified maize starch under Entry No. 61 subject to a 4% tax. e) Aggrieved by the decision, the appellant preferred a review application. Observing that no case for interference had been set up by the appellant, the High Court dismissed the review application vide its order dated 10th February, 2009. SUBMISSIONS OF THE PARTIES 4. Appearing on behalf of the appellant, Mr. K.K. Mani, learned counsel, advanced the following submissions: a) The High Court failed to consider the correct entry pertaining to the assessment year 1998-99. Exemption Entry No. 8 clearly outlined an exemption in favour of products of millet, including maize, because maize starch is in the form of flour, though the flour is not obtained by mere grinding of the grains, but rather through the treatment of maize by soaking it in water, subjecting it to various processes, and ultimately obtaining starch, which is sold as flour, and this process would certa....
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.... the statutory scheme of the Act, more particularly when the issue of classification has been settled by a court of law. This is evident from the State's consistent practice to treat maize starch as exempt from tax, as confirmed by way of a series of circulars issued over time categorically exempting maize starch from tax liability. Having regard to the clarifications issued in favour of exemption, the Circular dated 8th October, 1998 requiring the recovery of taxes retrospectively is a mere change of opinion without cogent reason and, therefore, is liable to be quashed. g) In any event, the aforesaid Circular cannot have a retrospective effect and will take effect only from the date of issue, i.e., on and from 8th October, 1998. 5. Finally, submitting that for the assessment year 1998-1999 the appellant is entitled to exemption from tax on maize starch in accordance with Exemption Entry No. 8, Mr. Mani prayed that the orders under challenge be set aside by declaring the appellant's entitlement to exemption; consequently, the appeals be allowed. 6. Mr. C. Kranthi Kumar, learned counsel appearing for the respondents while supporting the impugned judgment, contended as follows: ....
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.... was in force, the Act was amended by Act No.24 of 1993. The existing Schedule I was replaced with a new Schedule, and 'sago and starch of any kind' came to be inserted at Entry 53 of Part C of Schedule I with tax rate of 5%. 10. Act No. 32 of 1994, i.e., the Tamil Nadu General Sales Tax (Amendment) Act, 1994, further amended the Act. Entry 8 in Part B of Schedule III included the item which was hitherto covered by the Exemption Notification and, thus, the same ceased to be operative with such amendment. 11. By Act No. 37 of 1996, the rate of tax was reduced from 5% to 4% in respect of 'sago and starch of any kind'. 12. Considering that the statutory scheme as regards the classification of 'maize' underwent several changes over time, we deem it appropriate to provide a comprehensive overview of the applicable taxing and exempting entries at relevant time periods. To facilitate clarity, the following table enumerates the applicability of these entries: TAXING ENTRIES From To Entry No. Description Rate of Tax 12.03.1993 16.07.1996 53 of Part C of Schedule I sago and starch of any kind 5% 17.07.1996 26.03.2002 61 of Part B of Schedule I sago and starch of any....
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....nt year, i.e., "sago and starch of any kind" in Schedule I, referred by us as Taxation Entry No.61, and "products of millets (rice, flour, brokens and brans of cholam, cumbu, ragi, thinai, varagu, samai, kudiraivali, milo and maize)" in Schedule III which we are referring to as Exemption Entry No.8. 17. When Act No.32 of 1994 amended Schedule III of the Act, Exemption Entry No.8 did not include the word 'like' which was hitherto there in the Exemption Notification [No. 88 of 1970 dated 14th March, 1970]. According to English grammar, the word "like" can be used as a verb, as a noun as well as a preposition depending upon its setting. It had been used in the Exemption Notification as a 'noun". Once it becomes clear from Exemption Entry No.8, as introduced by Act No.32 of 1994, that (i) it does not include the noun "like" as the first word within brackets and (ii) that maize is only included along with rice, flour, etc. (and not maize starch), it is only those items within the brackets which, for the purposes of exemption, qualify as products of millets. It is, therefore, those products of millets specifically indicated, which are entitled to exemption under Section 8 of the Act rea....
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....ch of any kind which would obviously include maize starch. 23. Trite to say, the Legislature may not have intended two entries for the selfsame commodity, one under the exempted category and the other under the taxable entry. Therefore, maize starch has to be either covered by Taxation Entry No.61 or Exemption Entry No.8. For the purpose of ascertaining which of the two is the applicable entry, we need not labour much having regard to the language in which the two entries are expressed. Taxation Entry No.61 provides a more specific description and maize starch undoubtedly being a 'kind of starch' would, therefore, be comprehended in it. This is more so because what is covered by Exemption Entry No.8 is maize, which is a product of millet. The position would have been otherwise if Exemption Entry No.8 or any other entry in Schedule III carried the description of product of maize instead of 'product of millet'. 24. Law is well settled that if in any statutory rule or statutory notification two expressions are used - one in general words and the other in special terms - under the rules of interpretation, it has to be understood that the special terms were not meant to be included in....